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Doctors Medicines MCQs Q&A

  1. Laffer curve
  2. Phillip curve
  3. Kuznet Curve
  4. Lorenz Curve
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1 Answers

Option 1 : Laffer curve

The correct answer is the Laffer curve.

  • The Laffer Curve describes the relationship between tax rates and total tax revenue, with an optimal tax rate that maximizes total government tax revenue.
  • Typically, it has an inverted-U shape.
  • If taxes are too high along the Laffer Curve, then they will discourage the taxed activities, such as work and investment, enough to actually reduce total tax revenue.
  • In this case, cutting tax rates will both stimulate economic incentives and increase tax revenue.
  • The curve supports the notion in supply-side economics that tax and regulatory burdens can impede growth.
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